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Jul 23, 2011

Are Indian B-schools in a bubble as some project about American higher education? (Here is my EDU article). Schumpeter in his recent article in entitled “The latest bubble?” in the Economist, argues that American higher education bubble is already beginning to burst. Specifically, for business schools he concludes “Middle-ranking schools are seeing a significant drop in demand, which they have masked by taking weaker candidates, but which will eventually force them to start cutting back.” He also cites Peter Thiel, co-founder of PayPal who “believes that higher education fills all the criteria for a bubble: tuition costs are too high, debt loads are too onerous, and there is mounting evidence that the rewards are over-rated.”

With more than 3,000 B-schools, India has three-times the number of B-schools as compared to the US. This difference becomes stark considering that the size of the Indian economy is one-tenth of the US economy. The end result is poor quality of education, oversupply of MBA graduates which in turn increases unemployability and underemployability among graduates.

A recent article notes that according to All India Council for Technical Education (AICTE), last year nearly 60,000, or 30 per cent of the approved 200,000 management seats, remained vacant. Also, the number of applications coming in for the Common Admission Test (CAT) for MBA entrance have decreased from 260,000 to 200,000 in the last three years.

This clearly indicates that Indian B-schools are in a bubble. Except top-100 institutions, most will suffer from bursting of this bubble which is characterized by irrational exuberance, oversupply and poor quality.

Bubbles have a long history of existence around the world and they inevitably bust with severe damage to individuals, society and economy (remember dot-com bubble? housing bubble?). It’s time we collectively make our best effort to reduce the damage from the Indian B-schools bubble. Institutions have to start questioning if they are contributing to expanding the B-school bubble or containing it?

Jul 16, 2011

Branch campuses are in news again with some optimistic and others with pessimistic tone. However, this time it is more than Gulf region and also has some big names involved.

After mega launch of NYU, Abu Dhabi, Duke's plans for China and Yale's plan for Singapore are being closely watched. However, both of them have faced resistance from faculty. While Yale faculty is concerned about academic freedom, Duke's faculty is concerned about financial feasibility.

A report in University World News noted "Concerns over the cost of a new branch campus for Duke University in Kunshan, near Shanghai, which is set to open in 2012, has led to vocal opposition from Duke faculty." It adds that "Duke is spending around US$37 million on a new campus in China when more than US$125 million has been lopped off its own budget in recent years, and arts and humanities are facing a $3 million budget deficit this year. Some $5.5 million is being spent by Duke to ensure the facility meets US standards." This is significant commitment from the university and success of this model has implications for other universities considering to start branch campuses.

In India an interesting trend is emerging where foreign universities are starting their campuses in India while Indian universities are going abroad.

Philip Altbach in his article The Branch Campus Bubble? reminds us that "A necessary episode to recall is that 20 or more American universities rushed to Japan in the 1980s to start branches, but only two survived." We have also not forgotten fate of MSU, Dubai which had to close its undergraduate program due to enrollment short-falls. In a recent article Francois Therin notes "The future of higher education in the Gulf revolves around the issues of numbers and quality."

Branch campuses are getting a new impetus driven by an demand from countries like India and China and pressures to generate additional revenue streams. However, it will be interesting to see how these branch campuses are defining their target segment of students? Are they all targeting the same segment--self-financed students in management and engineering programs? Is this segment big and unique enough to support proliferation and feasibility of branch campuses?

Jul 9, 2011

IIPM and Arindam Chaudhuri have been synonymous with advertisements shouting "Dare to think beyond the IIMs!" (Here is Hoot's analysis on IIPM's advertisements). It took audacity (often to the limit of brashness) and entrepreneurial grit to equate oneself with big brands like IIMs. IIPM enrolls more than 5000 students across 8 campuses with more than 400 faculty members.

So, what's the issue? The issue is better understood if you see the advertisements of IIPM like below. What's the brand "promise" to a prospective student? They are most likely to see "MBA/BBA/EMBA" along with major brands like Cornell and Stern.

"1. Does AICTE/UGC [Indian regulatory bodies] recognize IIPMs programme in planning and entrepreneurship?
No. IIPM has never sought recognition from any statutory bodies and is proud of its world class course contents. Students bothered about statutory recognition of IIPMs programmes need not apply to IIPM....
2. Does IIPM award an MBA/BBA degree?
No. In India degrees can be awarded only by universities and therefore just like the IIMs, even IIPM (which is not an university) does not offer an MBA/BBA degree."

This disconnect and misrepresentation comes at a huge price to students (In fact, someone has started a website called IIPM is a scam!). IIPM's approach also made some leading brands like Stanford to issue a letter about IIPM's false claims. IIPM is also a classic case of how slow and toothless higher education quality assurance system in India is. Based on complaints, UGC expressed concerns in 2005 and then again in 2010, however, IIPM continues to grow using it's tried and tested method of advertising and ignoring regulation.

"The University Grants Commission is not happy with the Indian Institute of Planning and Management offering an MBA degree. UGC says no institute in the country can offer a degree course without its approval and IIPM does not have its go ahead.
Advertisements by IIPM in leading dailies across the country have been promising students a degree in MBA. But the fine print in the ad says the institute does not come under the purview of the UGC."

"...University Grants Commission (UGC) made it clear that the Indian Institute of Planning and Management (IIPM), run by Arindam Chaudhuri, is not recognised by the government or any of India’s higher education bodies"

More recently, Siddhartha Deb wrote an incisive article “Sweet Smell of Success: How Arindam Chaudhuri Made a Fortune Off the Aspirations—and Insecurities—of India’s Middle Classes.” (I can't even provide the link to the article as court has ordered to remove the article). Of course, Dean Chaudhuri did not like it and sued the author, magazine and Google (yes, you read it right--Google) for defamation. Here is the press release by Caravan magazine which published Deb's article and has been sued by IIPM.

Interestingly, there are many more unrecognized institutions in India. According to a government response, AICTE and UGC have received 101 and 23 complaints respectively about alleged malpractices. We still remember the fuss and attention Tri Valley scam in the US received , however, there are many Tri Valley's in India and nothing is being done. At least, in the case of TVU, it is now defunct, while Indian regulation is restricted to paperwork and rhetoric. In March 2010, "The Prohibition of Unfair Practices" bill was approved by the Cabinet, however it is yet to be approved by the Parliament.

IIPM's approach raises several questions about the profession and quality assurance of higher education in India:

Is IIPM misleading students or offering a unique choice?

Is Arindam Chauduri an inspiration or disgrace for education fraternity including faculty and entrepreneurs?

What does it say about Indian quality assurance environment? Why worry about foreign universities bill when one can always work-around it?

If you are a foreign university looking for collaborations in India, how do you distinguish between "recognized" and "unrecognized" institutions? What are the implications for your institutional brand?

How does one distinguish between institutions like ISB and IIPM when both are not recognized by AICTE? (ISB is ranked #12 in Financial Times). What brand risk a foreign institution is assuming in forging partnerships?

This is one issue on which I have more questions than answers. Any thoughts/comments/answers?

Jul 1, 2011

The number of High New Worth Individuals (HNWIs) have increased by 21% and 12% for India and China respectively, according to 2011 World Wealth Report. India added 26,000 new HNWIs and China added 58,000 in one year. HNWIs are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.

This expansion of wealthy class means number of self-financed international students may also grow by a healthy double digits. In times of severe budget cuts, this may present a very lucrative opportunity for many public institutions. The expansion of HNWIs is just one indicator of increase of very wealthy, however, self-financed international students may come from the immediate next segment under HNWI, which is even bigger in size.

Both China and India have a hyper-competitive environment to gain admissions into good quality institutions and quality of institutions falls precipitously beyond few top institutions. Many of the kids of HNWIs are not seeking a foreign degree for jobs rather they are seeking it for experience of studying abroad and social prestige associated with it.

Traditionally, India and China had been sending majority of its students at the graduate level where expectations for financial aid are high. With the budget cuts, many institutions are finding it tough to provide financial support. However, children of HNWIs can afford education and hence they are more likely to enroll at undergrad programs which in turn provides a longer revenue flow of four years as compared to one-two years at master's level.

However, the challenge remains in terms of finding these self-financed students. I believe the most effective strategy is to engage universities' current students and alumni through social media. Current students and alum are more likely to have a network which is similar to them in terms of social, cultural and economic background. Thus, creating a community where current students/alum can invite their friends and engage them through social media is the most credible and cost-effective channel. Here is an interesting reading on 10 Ways Universities Are Engaging Alumni Using Social Media and example of The Johns Hopkins.